Diminishing Marginal Returns Occur When

question 167

Multiple Choice

Diminishing marginal returns occur when

• A) the average product of the variable input eventually diminishes.
• B) the marginal product of an additional worker is less than the marginal product of the previous worker hired.
• C) the firm hires cheap, less-skilled workers in place of expensive, high-skilled workers.
• D) total product diminishes.

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Definitions:

Futures Contract

A formalized agreement that obligates the purchase or sale of a specific commodity or asset at an agreed-upon price at a future date.

Forward Contract

A non-standardized agreement to buy or sell an asset at a future date for a price agreed upon today.

Daily Resettlement

The process in futures trading where the gains or losses of the day are calculated, and accounts are adjusted accordingly to reflect the market value.

Forward Contract

A bespoke contract that allows two parties to trade an asset at a fixed price on a designated date in the future.